Economy melt-down Worldwide and SC issue in Pakistan

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Ali Arslan Zaki

The analysis carried out by the United Nations Department of Economic and Social Affairs also known as DESA stated that the COVID-19 pandemic is gradually destroying the global supply chains and the international trade and business. Given the fact that almost 100 countries have closed their national borders in the past month, the transport of goods along with the movement of people and flow of tourism has come to a total hiatus. Analysing UN’s previous and current reports , it can clearly be said and stated that the world economy could even shrink by up-to 1 per cent in 2020 due to the coronavirus outbreak which ironically seems to be a complete reversal from UN’s earlier forecasts last year which somewhat stated that the world might face a growth of 2.5 per cent.

The world economy also has a clear chance of declining even further if the restrictions on the country-wise economic activities are extended without a proper fiscal response. On the other hand, all of this could also have trickle-down effect on developing countries’ economies. In the short term, there could likely be a sudden drop in domestic consumer demand in majority of the developing countries. The demand for food, medical assistance and other important and necessary items could rise, but this would be more than offset by lower demand for not so important items like clothing and other services. Demand would also fall because of other factors such as foreign buyers delaying or cancelling orders; tourists, both local and international, cancelling trips; and especially the decline in the stock market which also causes a decline in people’s wealth and their willingness to spend. For countries with a huge numbers of foreign workers such as Philippines , India and Pakistan , or with large diasporas such as Somalia , remittances will likely slow down due to layoffs and late salary payments in Europe , the Gulf and USA where majority of these people reside and work. By the end of April, as the number of coronavirus infected patients and fatalities increase, Pakistan will be in a dire need of some extraordinary changes to business as usual in many areas. A completely transformed logistics and supply chain management culture. The capacity and range of local manufacturing of food, medicine and FMCGs, like soap. Digital payments and, in particular, contactless transactions. Public-sector hospital capacity, and mental health at large. Education and online teaching and learning. The challenges and possibilities are endless. As this crisis metastasizes into the kind of ugliness and horror we have witnessed in other countries, it will become increasingly important to remind ourselves that slowing the speed at which the peak number of cases and fatalities has arrived was exactly the purpose of flattening the curve. Pakistan’s measures and preparation leave a lot to be desired, but so did China’s and the United States’ and every other countries on the planet. We must be present and alive to the history we are witnessing. Part of the challenge we face is to be able to process the disruption, fear and anxiety that Covid-19 has caused in a manner that solves problems, rather than exacerbates them. But given the size of economy, and its complexity – even here in Pakistan, which has numerous weak nodes, in comparison with places like Sweden, or Japan – has increasingly pushed state and society to establish and normalize logistics and supply chains that are essentially ungoverned. Well, even in the absence of a lockdown, many local manufacturers have slowed down or stopped production. With the lockdown, even essential or skeletal staff isn’t able to get to work – let’s say they work at a local medicine manufacturer. So, what happens next? Well, there’s not as much medicine to move from the factory to the wholesaler. The wholesaler just happens to be shut down as it is. Even if we could work with the trucking companies to pick up and drop off the medicines, they will struggle to find the goods and products that we are asking them to move. As the Covid-19 crisis metastasizes, we will witness an unprecedented exhaustion of our usually resilient people and systems.